What really makes us happy has little to do with money. Even better, what’s good for us, is great for the whole country. Dave Hansford explores the new economics of happiness
Money can’t buy us love. The Beatles knew it, but it took a recession to remind the rest of us: what really makes us happy has little to do with money. Even better, what makes us happy is good for the whole country. Good explores the new economics of happiness and discovers that changing the way we think about wealth and success can have a profound impact on our lives
If money could buy happiness, we should be laughing all the way to the bank. Until last year, New Zealand’s economy wasn’t doing too badly. Between 1998 and 2007, our gross disposable income rose 12.6 percent. Despite the arrival of the recession last year, it jumped again, by almost two percent. New Zealand’s gross domestic product, or GDP, grew by an average 3.2 percent over the decade to December 2008. This gets called progress—and some economists will tell you it’s good for everybody, because the wealth trickles down through society.
“Money has become a symbol for really important human values,” says Niki Harré. A psychologist and senior lecturer at the University of Auckland, Niki’s spent much of her career pondering that chimera called happiness. “People desire money, because they see it as symbolising status, freedom, choice, opportunity, security. We have this fantasy about money that if we just had a couple of million in the bank, we could do all the things we wanted to.”
But has more money made us happy? The statistics suggest not. The incidence of depression and other mental disorders jumped sharply in the 1990s; 47 percent of New Zealanders will now suffer mental illness at some time in their lives. New Zealand has the fourth-highest male suicide rate of 13 OECD nations, and the second-highest young male suicide rate. A quarter of New Zealanders aged 15 and over were obese in 2006 and 2007. In 2005, the New Zealand Police recorded more than 60,000 incidents of family violence.
It’s a pattern that’s repeated the world over. In 50 years of rising prosperity and improved living standards, levels of happiness in America have stagnated. A US survey of seven-figure salary CEOs found their happiness hovered only slightly above that of their employees. Japan’s economy skyrocketed on the back of an unmatched economic boom, but a Japanese ‘life satisfaction’ index linked to income flatlined above US$10,000 per annum.
“When it buys you things like warmth in winter, nutritious food and basic education, money is all good,” says Niki. Beyond that, money starts to act in more complex ways. Use it strategically—to eat good food, learn new skills—and you can buy some happiness. If you don’t, it ends up having almost a negative effect. “Say you work long hours, but by working really hard to earn that money, you neglect your family and end up getting divorced. That money ends up making you less happy.”
But if earning more isn’t the secret to greater happiness, what is? There are huge industries based around answering that question: self-help books, seminars, counselling, drugs. There’s no single answer to what makes us happy. It’s a gamut of factors: being well connected to others, enjoying good health, volunteering, access to the arts and decent public transport, plenty of fresh air and free time.
The really good news—especially since the recession took hold—is that many of the things that make us happy have little to do with money. Even better, new theories suggest that what makes us happy on a personal level is also good for the wellbeing of the country as a whole.
One-gauge progress
GDP is a measure of all the products and services produced in a given region over a given period. Trouble is, what’s good for GDP is not always what’s good for you and me. “GDP counts all spending as a benefit, when in reality we spend a lot on things like dealing with pollution and crime,” says Victoria University masters student Aaron Packard, who’s researching a thesis on the topic. “That might make our GDP look really big and healthy, but it doesn’t actually contribute to what I would call progress.”
Say, for instance, I’ve just undergone expensive medical treatment for an ongoing condition, spent loads on an acrimonious lawyer-assisted divorce and written off my car in a big crash. I’ve just had a bumper year according to GDP—and a bummer of a year in every other sense.
The preoccupation with growing GDP, say critics, is as futile as an individual’s pursuit of happiness through the frenzied accumulation of material possessions. Both are doomed because they miss the stuff that really matters.
GDP cannot spot loneliness, prejudice or despair. Nor can it detect the presence of love, pride or belonging—much less account for it. Even worse, GDP doesn’t factor in the future. It can’t recognise that by chopping down a forest you’ve denied that forest to future generations; that you’ve effectively borrowed from their prosperity. As far as GDP is concerned, it is current income that simply won’t show up next year. As economic writer Hazel Henderson puts it, “Trying to run a complex society on a single indicator [like GDP] is like trying to fly a 747 with only one gauge on the instrument panel.”
A better way
Genuine progress indicators, or GPIs, are more than just another snappy economics acronym; they’re a set of social and environmental indicators that provide a credible alternative to how we value things. GPIs start from the premise that there’s more to life than money. They check society for vital signs other than the thickness of its wallet: a sense of place, of safety, societal tolerance and equity, a healthy environment, healthy people, happy people. And unlike GDP, GPIs aren’t limited by the here and now. Back to that forest: we can cut down all the trees, export the wood and spend the money now—or we can measure the value of the ecosystem, its importance to future generations and choose to leave the trees standing.
GDP is blind to these non-monetary exchanges, but GPIs recognise the benefits of volunteering, housework, parenting and other altruistic services, as well as the contribution of public infrastructure such as transport, sport facilities and art galleries. For this reason, some regional councils are already working on integrating GPIs into local governance as measures of progress and wellbeing (see ‘The Happy Region’, left).
Can an economic model really make people happy? Perhaps not, but by asking the right questions, we can at least recognise what Kiwis value. “A number of big sociological studies discovered that only a small minority of New Zealanders put income above quality of life,” says Green MP Jeanette Fitzsimons. “A large majority, when asked the question, ‘Are you prepared to give up some income in return for a better quality environment, or better family relationships?’, say ‘Yes’.”
As New Zealand-based psychologist and author John F Schumaker puts it: “The greatest irony in the search for happiness is that it is never strictly personal. For happiness to be mature and heartfelt, it must be shared—whether by those around us or by tomorrow’s children. If not, happiness can be downright depressing.”
Measuring happy
A number of groups are developing genuine progress indicators (GPIs) for New Zealand. One is the Massey University-based New Zealand Centre for Ecological Economics. Another is Anew New Zealand, a group that aims to improve national wellbeing and sustainability.
The path we are on, says Anew director Dave Breuer, is “a road to disaster”. His group has been working for years with central and local government, running workshops and hui, and bringing international GPI heavyweights such as Canada’s Ron Colman to spread a message of constitutional change. Dave says the recession presents “a fantastic opportunity to illustrate the failure of the current system … There’s a paradigm shift occurring, and we have a monumental opportunity to influence that process.”
Anew New Zealand means to lead the charge. It’s forming a new trust—a partnership between members of the public, business and government—backed up by a think tank “to come up with an alternative to this dilemma we’re all in”.
The group has made significant progress, working with Statistics New Zealand to develop a set of sustainability indicators, due to be released as Good goes to press. It’s a promising development, but there is not yet universal agreement on the ideal combination of national GPIs, or even how they should be used.
Some models, such as one used by the Centre for Ecological Economics, favour a quantitative approach, aggregating all data into a single number. That has its critics, including MP Jeanette Fitzsimons: “If you turn your natural resource accounts into monetary units, in order to try and make them comparable to GDP, that can be just as blind.”
Victoria University masters student Aaron Packard agrees. He favours the more qualitative ‘full-cost accounting’ model chosen by Greater Wellington.
Like anything worthwhile, GPIs are hard work. But their strength is where they give accounts of our key resources, like energy, land, soil, forests, fish. “They look at what is happening to your capital stock, how fast you are using it up and how well you are maintaining it,” says Jeanette. That means the current generation, not the next one, gets the bill for any loss of natural capital.
If adopted, GPIs could change the way we look at our world and how we measure progress as a society. “GDP can still be a strong constituent of genuine progress indicators,” says Aaron, “but it would be awesome to see the GDP reported on the six o’clock news, then to hear that GPI has gone up one percent.”
The happy country
When Bhutan’s King Jigme Singye Wangchuck declared in 1972 that he was less concerned about gross domestic product than gross national happiness, he unwittingly lent a name—and a mission statement—to a growing international movement.
In 2006, the Royal Government of Bhutan (www.pc.gov.bt) asked its people what was most important to them. The pilot survey was comprehensive, to say the least: it took seven hours to interview each subject. With the deadline in peril, researchers pared the final survey down to 188 questions—such as “Do you know your great-grandparents’ name?”, “Do you have someone to help you when you are sick?”—so it took only a morning to quiz people on their psychological wellbeing, health, time use, education, culture, governance, ecology, community vitality and living standards. From their answers, the Centre for Bhutan Studies (www.grossnationalhappiness.com) drew up a set of national indicators of wellbeing and progress.
On his coronation in 2008, King Khesar, Wangchuck’s eldest son, reminded his subjects that “without peace, security and happiness we have nothing.” That year, gross national happiness (GNH) became more than a philosophy. The Royal Government of Bhutan announced that it was adopting the GNH index into its constitution as the basis for its national accounting and development.
The score? Despite a relatively low GDP, a 2006 University of Leicester World Map of Happiness study rated Bhutan as the happiest country in Asia and the eighth-happiest out of 178 countries.
